Mortgage Refinance Guide

The Federal Reserve is believed to be raising short term interest rates again later this week. If it does raise interest rates this will be the 16th rate hike in less than 24 months. For homeowners with adjustable rate mortgages trouble is waiting just beyond the horizon.

Mortgages with adjustable interest rates were extremely popular over the past several years. Many homeowners leveraged their financial futures to purchase dream homes that they could not afford. The problem with these mortgages is that introductory periods, and the cushy monthly payments that go with them, are rapidly coming to an end.

The bad news when it comes to adjustable rate mortgages is the lender will periodically adjust your interest rate. When this happens your monthly payment amount will change accordingly. When this interest rate changes your monthly mortgage payment can increase dramatically; recent interest rate hikes will cause the monthly payment on a $150,000 mortgage to go up around $200.

If you are a homeowner faced with impending financial problems due to rising mortgage payments your options are somewhat limited. If you purchased too much home for your budget, selling the home may be the only sure bet. If you refinance to a traditional thirty year fixed rate mortgage your payments may go up significantly; however, you will be able to count on them remaining at that amount.

If you are still in the introductory period of your adjustable rate mortgage the next two years could be financially troublesome. Expect to see growing interest payments over the coming years. The number of homeowners with impending mortgage troubles has even caught the attention of the government. There are new standards for adjustable rate mortgages proposed to keep people out of trouble.